ConsumerWatch: Scammers File Fake Tax Returns, Pocket Real Refunds

SAN FRANCISCO (CBS 5) — It’s less than a month before the April 17th tax filing deadline. While taxpayers and accountants are getting busy, so are criminals.

Scammers are filing fraudulent returns before taxpayers, pocketing refunds in the process. Taxpayers only know they have been scammed when their return is rejected.

“It’s a slap in the face. It was only not even a year after she passed,” said Stephanie McClung, a scam victim whose five-month-old baby daughter recently died.

Tax refund fraud has increased by 500 percent in just two years. The Internal Revenue Service said it received more than two million fraudulent returns last year.

After McClung’s baby died, someone succeeded in stealing her identity, using it to file for a $1,500 tax refund.

According to the IRS, this is a common crime. Even dead war heroes are victims. Scammers can file a fraudulent return in a person’s name, and in one case, have the refund issued directly to a prepaid debit card.

But you don’t have to be dead to be a victim, as Norma Eddington found out.

“I called the IRS, they told me somebody had already electronically filed under my Social Security Number,” said Eddington, an out of work mother.

According to the Identity Theft Council, a criminal only needs a name and Social Security Number, which can be stolen from doctors offices and schools.

“It’s an extremely easy crime for criminals to commit, and an extremely difficult crime for the IRS to combat,” said Eddington.

Fraud is prevalent because of fast and easy online tax filings combined with the Internal Revenue Service, which does not cross-check returns.

Eddington was told by the IRS she may have to wait months before she sees her refund. The IRS said it is implementing new filters and a screening process. So far it claims to have caught 87 percent of fraudulent returns last year.

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